Basic Training: I Gotta Be Thankful . . .

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq., owner of Ask The Business Lawyer, is an award-winning business attorney, speaker, and Entrepreneur Magazine online contributor. She saves consulting and professional services companies time, money, and aggravation by serving as their outsourced legal counsel.

Posted on January 27, 2014 in IP & Social Media

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My husband and I don’t always see eye-to-eye. He’s an easygoing (albeit highly professional) personal trainer; I’m an uptight, brainy attorney. But in this season of Thanksgiving, I am supremely thankful for my husband . . . especially that he has not gotten himself into some of the harebrained schemes and ideas that some of the husbands mentioned below have been contemplating. Here are just a few ways that OPH (other people’s husbands) are getting themselves and their families into trouble by not getting sound legal advice:

Q.: Is it legal to take an existing invention, rebrand it and sell it to a different market? As in change its use?

A.: Would it be legal for me to break into your house, steal your wife’s diamond engagement ring, take the stone out of the setting, split it in two to make a pair of stud earrings and sell it to someone else? Of course not. That’s what you’re looking to do–even if you don’t have the criminal intent. It’s not for you to take someone else’s product and make your own buck off it–certainly not without having some arrangement with the product’s inventor. Get permission for what you want to do or make your own product for the different market and use you want to sell to.

Q.: My wife is an employee of a small firm that does not have office space, and all employees work in their own offices at their homes. My wife is responsible for the purchase and maintenance of her home office computer and electronic files. But I provide all of her technical support, upkeep and backups of her computer. Could she actually pay me for these services from her income, and could I then form a business out of this activity, either as a sole proprietor or incoporated?

A.: Having your wife pay you from her income makes no sense–all it does is decrease her individual income and provide you with income. Either way, the household income is the same. In addition, as an employee, she may not get the full benefit of tax deductions for paying for professional services. Also, if your wife is your only client, you won’t have much of a business . . . and could run the risk that you would be considered her employee. Which could jeopardize her standing with her company. If you’re that proficient as tech support, consider starting your own business and make a proposal to her company supervisors that you handle the tech support for the various home offices for the company. That way, the company pays you directly, you build a more substantial client base and you don’t siphon income from your wife.

Q.: I opened up a small business and signed a lease with a landlord. I may be closing my doors soon, as the economy worsens, and have discovered I have a 10-year personal guarantee for the lease. What can I do to protect my family?

A.: It’s all very well to start a business, but when you have a family, you have an obligation (moral, if not legal) to disclose what you’re doing and let them know how the risks may have an impact. You also have an obligation (again, moral, not legal) to seek the best advice you can form trained professionals–for it’s not just your well-being on the line.

A lease may provide a way to get off the hook personally if the business vacates the premises (sometimes called a “good guy clause”). In a good guy clause, the landlord won’t go after you personally but will continue to hold the company responsible. In this economic climate, however, landlords may be less inclined to let someone off the hook if the lease doesn’t give you that kind of “out.” If you didn’t get legal counsel before, it’s time to get it NOW. Speak to a local business attorney who knows bankruptcy law (or a bankruptcy attorney familiar with business issues) to review the lease and help determine whether you’d be eligible for personal bankruptcy given your current financial situation.

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